Issuance of invoices for non-existent transactions

Issuance of invoices for non-existent transactions: offence and defence

The issuance of invoices or other documents for non-existent transactions is an autonomous tax offence, distinct from the subsequent use of the false documentation by the recipient. The offence under Article 8 of Legislative Decree 74/2000 brings criminal protection forward to the stage of creating and introducing the document into the tax system, without requiring that evasion actually occur.

When the offence arises

Article 8 punishes anyone who, in order to enable third parties to evade income tax or VAT, issues or releases invoices or other documents relating to non-existent transactions.

According to settled case law, the offence is instantaneous and is completed when the document is issued and leaves the issuer's sphere of control. It is not necessary that the invoice be subsequently used by the recipient, nor that evasion actually take place.

Where several invoices or documents for non-existent transactions are issued in the same tax period, the law treats the multiple issuances as a single offence.

The offence is therefore distinct from fraudulent declaration through the use of invoices or other documents for non-existent transactions: in the former, what matters is the issuance of the false documentation; in the latter, its use in the tax return.

The protected legal interest

The offence does not protect only the immediate interest of the Treasury, but safeguards the reliability of the documentary system on which tax assessment and determination are based.

The criminal wrong lies in creating and circulating fiscally relevant documentation referring to non-existent transactions, capable of distorting the correct representation of economic relations and interfering with the tax authority's assessment function. Protection therefore intervenes at a stage prior to any evasion carried out by the user of the documentation.

Objectively and subjectively non-existent transactions

The criminal-tax notion of a non-existent transaction covers various forms of divergence between the economic reality of the transaction and its documentary representation.

Non-existence may be objective, where the documented transaction was not actually carried out, in whole or in part. The same notion also covers cases where the consideration or VAT is stated at a higher amount than the real one.

Non-existence is subjective where the transaction is attributed to persons other than those actually involved.

The distinction is particularly relevant evidentially. The assessment cannot stop at the formal invoicing data, but requires reconstruction of the actual performance of the services, the identity of the economic operators involved, the operating capacity of the businesses, the contractual relations and the financial flows.

In proceedings involving companies without an adequate organisational structure, intermediaries, commercial triangulations or complex invoicing chains, verifying the economic substance of the transactions and the actual role of the various parties is therefore central.

Specific intent

The offence requires specific intent: the issuance or release of the documentation must be aimed at enabling third parties to evade income tax or VAT. The purpose required by the provision also includes enabling third parties to obtain an undue refund or the recognition of a non-existent tax credit.

Proof of specific intent cannot be exhausted in the mere finding that the documentation is false, nor automatically inferred from the irregularity of the transaction alone. It must be verified that the issuer's conduct was actually directed at enabling the recipient's tax evasion.

According to the principles developed by the Supreme Court, the presence of further or concurrent purposes does not exclude the offence where the evasive purpose required by the provision is also proved. Conversely, where the conduct is supported exclusively by purposes unrelated to third-party tax evasion, the specific intent required by the offence is lacking.

Establishing the subjective element is therefore one of the main areas of defence and requires examination of the operating context, the relations between issuer and recipient, the economic reasons for the transaction and the entire documentary and financial picture.

Penalties

Article 8 provides, for the ordinary offence, imprisonment from four to eight years. Where the untrue amount stated in the invoices or documents, per tax period, is below EUR 100,000, imprisonment from one year and six months to six years applies.

The EUR 100,000 limit is not a threshold of punishability. Below that amount the conduct remains criminally relevant, with the different sentencing framework under paragraph 2-bis applying.

The relationship between issuer and user

The criminal-tax system keeps distinct the conduct of the person issuing the false documentation and that of the person who subsequently uses it in the tax return.

Article 9 introduces a derogation from the ordinary rules on complicity: the issuer and those acting with him are not punishable as accomplices in the declarative offence committed by the user; conversely, the person using the invoices and those acting with him are not liable as accomplices in the offence of issuance.

The statutory separation of the two offences is also particularly relevant on the asset side, since it prevents the tax advantage obtained by the user from being automatically transferred to the issuer.

Personal precautionary measures

In proceedings for the issuance of invoices or other documents for non-existent transactions, personal precautionary measures may apply where the requirements of the Code of Criminal Procedure are met.

The abstract seriousness of the charge is not sufficient. Serious evidence of guilt and specific precautionary needs relating to the risk of tampering with evidence, flight risk or a concrete risk of reoffending must be established. The measure must also comply with the principles of adequacy, proportionality and gradualness.

Depending on the circumstances, coercive or disqualifying measures may be considered, with possible consequences for the conduct of the business or for the management functions held by the suspect. Verifying the concreteness and currency of the precautionary needs and the adequacy of the measure is therefore an autonomous area of defence.

Preventive seizure and confiscation

In proceedings for the issuance of invoices for non-existent transactions, preventive seizure aimed at confiscation, direct or by equivalent, under Article 12-bis is particularly relevant.

Case law distinguishes the price of the offence of issuance from the profit of the evasion carried out by the user. The tax saving obtained through the use of the invoices is obtained directly by the person using the documentation in his own tax position and cannot be automatically attributed to the issuer.

For the perpetrator of the offence of issuance, what matters is the price of the offence, consisting of the consideration or benefit agreed or received in connection with issuing the false documentation. It follows that seizure ordered against the issuer cannot automatically be measured against the entire amount of tax evaded by the recipient of the invoices.

The defence must therefore verify:

• the correct qualification of the economic quantity identified by the prosecution as confiscable
• the actual receipt of the consideration or benefit by the issuer
• the attributability to the suspect of the assets subject to the measure
• the direct or by-equivalent nature of the seizure
• the correspondence between the value of the assets seized and the amount actually confiscable

The distinction between the issuer's and the user's position also matters with regard to the tax debt. Payment or instalment of the tax debt owed by the user does not, in itself, remove the confiscability of the price possibly obtained by the issuer. Correctly delimiting the object of the seizure is therefore a central step in the defence strategy.

Liability of the entity under Legislative Decree 231/2001

The issuance of invoices or other documents for non-existent transactions is among the tax offences that may give rise, where the statutory requirements are met, to the administrative liability of the entity under Article 25-quinquiesdecies of Legislative Decree 231/2001.

For the offence under Article 8(1) a financial penalty of up to five hundred quotas is provided; for the case under paragraph 2-bis, concerning amounts below EUR 100,000, the financial penalty is up to four hundred quotas. Where the entity has obtained a significant profit, the financial penalty is increased by one third. The disqualifying sanctions provided by the 231 framework for tax offences may also apply.

The entity's liability does not automatically follow from the criminal liability of the natural person. The attribution criteria under Legislative Decree 231/2001 must be independently verified, with particular regard to the position of the perpetrator, the entity's interest or advantage and the organisational arrangements actually adopted.

Managing the proceedings therefore requires coordination between the position of the natural person and that of the entity, also considering any divergence of defence interests.

Legal Aid's defence strategy

The defence in proceedings for the issuance of invoices or other documents for non-existent transactions requires an analytical reconstruction of the economic transaction charged and an independent review of the elements gathered in the tax assessment. The defence activity focuses in particular on:

• the actual performance of the services and their concrete economic substance
• the organisational structure and operating capacity of the businesses involved
• the contractual relations and the documentation underlying the invoices
• the reconstruction of financial flows
• identifying the parties who actually performed or received the services
• awareness of any non-existence of the transaction
• proof of the specific intent to enable another's tax evasion
• the correct identification of the price or profit taken as the object of seizure
• coordination between the criminal and the tax proceedings

The elements and presumptions used in the tax assessment do not automatically operate in the criminal trial with the same evidential value. They must be assessed under the rules of evidence of the criminal trial and compared with all the material gathered in the proceedings.

The firm, based in Milan, operates throughout Italy in proceedings that increasingly involve complex corporate structures and international commercial transactions, where reconstructing the economic substance of the transactions charged is particularly important.

Reconstructing the economic reality of the transactions, independently verifying the subjective element and reviewing the lawfulness of any precautionary measures are therefore the main axes of the defence.

Related practice areas

• Fraudulent declaration through the use of invoices or other documents for non-existent transactions
• Fraudulent declaration through other artifices
• Unfaithful declaration
• Failure to file a return
• Concealment or destruction of accounting documents
• Failure to pay VAT
• Undue set-off
• Administrative liability of entities – Legislative Decree 231/2001
• Money laundering and self-laundering

Frequently asked questions

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